JULY 2009

Build America bonds

Issuance and Trade Activity

Prepared by the Municipal Securities Rulemaking Board

 JULY 2009 | BUILD AMERICA BONDS page 1

The
American Recovery and Reinvestment Act of
2009 enacted by Congress in February directly affects
capital raising and the issuance of bonds by states and
municipalities. Among other stimulus programs de-
signed to rejuvenate the public sector during this eco-
nomic recession, the legislation introduced a new type
of municipal bond, Build America Bonds (BABs), which
provide state and local governments a new method of
financing capital projects with a federal subsidy. The
lower borrowing costs made possible by the subsidy
are intended to ease the current financial burden that
state and local governments are facing, and stimulate
spending on a variety of public projects.
of BABs has caused the municipal taxable market to
account for nearly 11 percent of all long-term issuance
in 2009 through June 11, considerably higher than
the historic annual average of 7 percent since 2000.
According to some estimates, BAB issuance will top
$50 billion in 2009 with another $100 billion coming
to market in 2010.4 A list of BAB issues is provided in
Figure 6.
Figure 1
LONG-TERM* MUNICIPAL ISSUANCE
January – June 11, 2009

While tax-exempt securities traditionally have been

BAB 7%
the most common form of debt issued by state and
local governments, the BAB program allows state Non-BAB Taxable 4%
Tax Exempt 89%
and local governments to issue an unlimited amount Alternative
Minimum Tax <1%
of taxable debt through the end of 2010. Issuers can
elect either to receive a direct payment from the U.S.
Treasury Department or to provide the bondholders
with a tax credit.
*
Long-term securities include all maturities of 13 months or more.
Source: Thomson Reuters
Under the direct payment option, the Treasury Depart-
ment pays the issuer 35 percent of the interest paid
on the bonds. In contrast, if the issuer elects the tax BAB issues have been used for a variety of projects
credit option, the bondholder will receive a tax credit since the first bond was issued in April 2009. As of
equal to 35 percent of the coupon that can be applied June 11, 2009, 45 percent of all BAB issues (based
against their federal income tax liability. on par amount) have been used for general public im-
provement projects, 30 percent for transportation, 16
percent for education, 5 percent for electric and public
Issuance of BABs power and 3 percent for water, sewer and gas facilities
The first BABs were issued on April 15, 2009 by the projects.
University of Minnesota and the University of Virginia.
Figure 2
The largest BAB issue as of June 11, 2009 was the
State of California’s $5 billion issue on April 22, 20091.
BUILD AMERICA BOND ISSUANCE
Seventy-nine issuers in 25 different states and the Dis- USE OF PROCEEDS
trict of Columbia took advantage of the new program April 15 – June 11, 2009
between April 15, 2009 and June 11, 2009, with BAB
Transportation 30%
issuance totaling $11.9 billion and 84 different issues,
according to data compiled from Thomson Reuters Electric and
Public Power 5%
and Bloomberg. As of June 11, all BAB issuers have
Water, Sewer
used the direct payment method. General & Gas Fac 3%
Purpose 45% Other 1%
Between April 15, 2009 and June 11, 2009, BAB issu-
Education 16%
ance accounted for 16 percent of all long-term2 new
issues in the municipal market and accounted for over
75 percent of all long-term taxable issuance.3 Issuance Source: Thomson Reuters

1
Excluding one series of the Mandatory Put Bonds issued by the State of California.
2
Long-term securities include all maturities of 13 months or more.
3
Excluding $185 million of AMT issuance, according to Thomson Reuters.
4
See “Build America Bonds,” Business Week (May 7, 2009).

Municipal Securities Rulemaking Board

 page 2 BUILD AMERICA BONDS | JULY 2009

BABs Trading Activity Figure 3

According to data collected from the Municipal Secu-
rities Rulemaking Board’s Electronic Municipal Market
Access (EMMA) system, primary and secondary trad-
ing volume was strong for BAB issues from April 15
to June 11, totaling $23 billion on 30,633 trades and
accounting for 4 percent and 2 percent of the overall
municipal par volume and number of trades reported
to the MSRB, respectively. Even though the number of
BAB trades of $100,000 or less accounted for nearly
74 percent of all BAB trades, the par value of those
trades accounted for approximately 2 percent of total
par volume traded. Figures 3 and 4 summarize trading
activity by trade size and different types of trades.
Trading volume for the largest BABs in terms of par
BAB Trading activity BY TRADE SIZE
April 15 and June 11, 2009
TRADE Par Amount Number
SIZE ($ Million) of Trades
0 – $100,000 $516 22,724
More than $100,000 $22,310 7,909
Total $22,826 30,633
Source: MSRB
Figure 4
BAB Trading activity BY TRADE TYPE
April 15 and June 11, 2009
TRADE Par Amount Number
TYPe5 ($ Million) of Trades
6

value issued is shown in figure 5. As is typical in the
municipal market, trading volume was heavier in the
first trading days and accounted for most of the par
volume traded. On average, approximately 70 per-
cent of par volume traded for the four largest BABs
occurred in the first five trading days.
Customer Bought $14,856 23,646
Customer Sold $3,872 1,607
Inter-Dealer Trades $4,098 5,380
Total $22,826 30,633
Source: MSRB

Figure 5

BUILD AMERICA BOND TRADING ACTIVITY

5-Day Trailing Average
1500

1200 State of California 2039

State of California 2034

Par Value ($Millions)

900
MTA NY

NJ Turnpike Auth
600

300

0
4/24/09 5/1/09 5/8/09 5/15/09 5/22/09 5/8/09 5/29/09 6/5/09 6/12/09

Source: MSRB

5
Customer Bought — a municipal trade in which a customer bought the security from a broker-dealer or bank. Customer Sold — a
municipal trade in which a customer sold the security to a broker-dealer or bank. Inter-dealer — a municipal securities trade between
two broker-dealers, including dealer banks or broker’s brokers.
6
  Includes the following BABs: State of California 2034 maturity, State of California 2039 maturity, New York Metropolitan Transporta-
tion Authority and the New Jersey Turnpike Authority.

Municipal Securities Rulemaking Board

 JULY 2009 | BUILD AMERICA BONDS page 3

Figure 6
Build America Bond Issuance
Sale Par Amount Ratings7
Date ISSUE $ Millions S&P Moody’s Fitch

04/15/09 University of Minnesota, MN 37.3 AA Aa2 NR

04/15/09 University of Virginia, VA 250.0 AAA Aaa AAA
04/16/09 Plainfield Fire Protection District, IL 8.2 NR Aa3 NR
04/20/09 New Jersey Turnpike Authority, NJ 1,375.0 A+ A3 A
04/21/09 City of De Pere, WI 2.7 NR Aa3 AA
04/22/09 State of California 5,000.0 A A2 A
04/22/09 Du Page Community College District #502, IL 62.5 AAA Aaa NR
04/22/09 Riley County Unified School District #383, KS 54.3 NR Aa3 NR
04/23/09 Metropolitan Transportation Authority, NY 750.0 AA NR A+
04/23/09 Milan Area School District, MI 49.2 AA- Aa3 NR
04/28/09 Lake County Township High School District #121, IL 23.7 AA NR NR
04/28/09 City of Oshkosh, WI 2.9 NR Aa3 NR
04/28/09 City of Oshkosh, WI 16.7 NR Aa3 NR
05/05/09 Sacramento Municipal Utility District, CA 200.0 A+ A1 A
05/06/09 State of Louisiana 103.1 AA Aa3 NR
05/07/09 Johnson County Unified School District #233, KS 95.0 AA Aa3 NR
05/07/09 City of Mesa, AZ 59.9 AA- A1 NR
05/07/09 Southern Illinois University, IL 53.7 AAA Aa2 NR
05/07/09 Victor Valley Community College District, CA 12.0 AA- Aa3 NR
05/11/09 City of Glendale, WI 2.9 NR A1 NR
05/11/09 Johnson County Unified School District #229, KS 73.0 AA Aa1 NR
05/11/09 Villa Park, IL 7.0 AA NR NR
05/12/09 Brier Creek School Building Corp, IN 27.7 AA+ - -
05/12/09 Illinois State Toll Highway Authority, IL 500.0 AA- Aa3 AA-
05/12/09 Sedgwick County Unified School District #259, KS 132.5 AA Aa3 NR
05/12/09 City of Staples, MN 2.0 A NR NR
05/13/09 Utah Transit Authority, UT 261.5 AAA Aa3 AA
05/13/09 Van Buren Public Schools, MI 79.0 AA- Aa3 NR
05/14/09 Council Bluffs, IA 7.2 NR A1 NR
05/15/09 Brea Public Financing Authority, CA 12.9 AA- - -
05/18/09 Central Weber Sewer Improvement District, UT 51.0 AAA NR AA
05/18/09 City of Fort Dodge, IA 9.0 NR A1 NR
05/18/09 City of O’Fallon, IL 9.3 AAA - -
05/19/09 City of Green Bay, WI 8.7 NR Aa2 NR
05/19/09 City of Saint Paul, MN 9.3 AAA NR NR
05/19/09 West Valley-Mission Community College District, CA 120.8 AA Aa2 NR
05/20/09 City of Albany, MN 0.8 NR Baa1 NR
05/20/09 Brown County, WI 13.5 NR Aa1 NR
05/20/09 City of Rugby, ND 4.8 A+ NR NR
05/21/09 Grand Rapids Community College, MI 12.0 AA Aa2 NR
05/21/09 South Dakota University, SD 90.3 AAA NR NR

Sources: MSRB,Thomson Reuters, Bloomberg

7
Ratings as of Sale Date; NR stands for non-rated.
Municipal Securities Rulemaking Board
 page 4 BUILD AMERICA BONDS | JULY 2009

Figure 6 continued
Build America Bond Issuance
Sale Par Amount Ratings7
Date ISSUE $ Millions S&P Moody’s Fitch

05/26/09 Fayette County School District Finance Corp, KY 41.2 AA Aa3 NR

05/26/09 Staples Economic Development Authority, MN 0.6 A- NR NR
05/27/09 City of Cold Spring, MN 1.0 NR A3 NR
05/27/09 State of Louisiana 121.3 AA Aa3 NR
05/27/09 New Jersey Transportation Trust Fund Authority, NJ 273.5 AA- A1 A+
05/28/09 City and County of Denver Bd of Water Commissioners, CO 44.0 AAA Aa2 AA+
05/28/09 Harris County Metropolitan Transit Authority, TX 82.6 AA Aa3 NR
05/28/09 Jefferson Parish Sales Tax District, LA 50.0 AAA Aa2 NR
05/28/09 Oswegoland Park District, IL 2.4 NR Aa2 NR
05/29/09 Des Moines Area Community College, IA 4.0 NR A1 NR
05/29/09 Eastern Michigan University, MI 79.2 A- A2 NR
05/29/09 Weber Basin Water Conservancy District, UT 15.7 AA NR AA
06/01/09 City of Altoona, IA 3.8 NR Aa3 NR
06/01/09 City of Altoona, IA 5.3 NR A2 NR
06/02/09 Finney County Unified School District #457, KS 63.2 AAA NR NR
06/02/09 City of San Antonio, TX 375.0 AA Aa1 AA+
06/02/09 City of Vadnais Heights, MN 7.0 AA NR NR
06/02/09 City of Waterloo, IA 7.4 NR A1 NR
06/03/09 City of Des Moines, IA 19.6 AAA Aa2 NR
06/03/09 Maricopa County Deal Valley Unified School District #97, AZ 17.0 - Aa3 AA+
06/03/09 Washington Metropolitan Area Transit Authority, DC 55.0 A A1 NR
06/03/09 State of Wisconsin 54.5 AA- Aa3 AA-
06/04/09 Newaygo County Fremont Public Schools, MI 43.9 AA- Aa3 NR
06/04/09 Southern California Metropolitan Water District, CA 78.4 AAA Aa2 AA+
06/05/09 Broward County School Board, FL 63.9 A+ A1 A+
06/05/09 Village of Lomira, WI 1.9 NR NR NR
06/08/09 Washington County West Bend Joint School District #1, WI 15.0 AA NR NR
06/09/09 Anderson School District #1, SC 25.0 AA Aa1 NR
06/09/09 Clark County, NV 210.0 AA+ Aa1 NR
06/09/09 City of Independence School District , MO 1.5 AAA NR NR
06/09/09 San Bernardino Community College District, CA 60.2 AA- Aa3 -
06/09/09 Southwestern Michigan College, MI 7.5 AA NR NR
06/10/09 City of Cedar Rapids, IA 29.2 NR Aaa NR
06/10/09 City of Tempe, AZ 9.3 AAA Aa2 NR
06/10/09 University of Texas, TX 330.5 AAA Aaa AAA
06/11/09 Huron School District #2-2, SD 3.5 AAA - -
06/11/09 East Detroit Public Schools, MI 8.6 AA- Aa3 NR
06/11/09 Montague Area Public Schools, MI 19.7 AA- NR NR
06/11/09 Nebraska Public Power District, NE 50.4 A A1 A+
06/11/09 State of Ohio 23.7 AA Aa3 A+
06/11/09 Jackson County Community Unit School District #186, IL 3.3 AAA - -
Sources: MSRB,Thomson Reuters, Bloomberg

7
Ratings as of Sale Date; NR stands for non-rated.
Municipal Securities Rulemaking Board
 JULY 2009 | BUILD AMERICA BONDS
MSRB Rules Regarding BABs
Although the bonds are taxable, BABs are municipal
securities subject to all MSRB investor protection and
other rules on dealers’ municipal securities activities,
including rules on fair practice, political contributions
and other conflicts of interest. MSRB rules also govern
dealers in the areas of uniform practice (including au-
tomated clearance and settlement), official statement
submission and dissemination requirements, trade
reporting and the professional qualifications of regis-
tered representatives and principals. Although BABs
may be sold by some dealers’ taxable sales desks,
MSRB rules require municipal securities principals to
supervise all municipal securities activities, including
these taxable municipal bond sales.
MSRB rules require underwriters to submit official
statements to the MSRB for most primary offerings
and dealers selling municipal securities to report
transaction prices to the MSRB, usually on a real-time
basis. Thus, all official statements and real-time trade
price information for BABs is available for free through
the MSRB’s EMMA website at www.emma.msrb.org.
Investors interested in learning more about an indi-
vidual BAB or any other type of municipal security can
go to the EMMA website to view or download relevant
documents and data. For more information on the
application of MSRB rules to BABs, please see MSRB
Notice 2009-15 and MSRB Notice 2009-30.
About the MSRB
The Municipal Securities Rulemaking Board (MSRB)
was established as a self-regulatory organization by
Congress in 1975 under the Securities Exchange Act
to develop rules regulating securities firms and banks
involved in underwriting, trading and selling munici-
pal securities. The MSRB also operates information
systems, including the Electronic Municipal Market
Access (EMMA) system, to promote transparency and
access to municipal bond information, and conducts
extensive outreach and education.
The MSRB is composed of 15 members from the mu-
nicipal securities dealer community and the public,
and is charged with protecting investors and promot-
ing a fair and efficient market. Members of the MSRB
meet throughout the year to make policy decisions,
Disclaimer
The information and data provided in this report are provided without warranties or representations and on an “as is” basis. The
MSRB hereby disclaims all representations and warranties (express or implied), including, but not limited to, warranties of merchant-
ability, non-infringement and fitness for a particular purpose. Neither the MSRB, nor any supplier, shall in any way be liable to any
recipient of the information and/or data contained in this report, regardless of the cause or duration, including, but not limited to, any
inaccuracies, errors, omissions or other defects in the information and/or data or for any damages resulting therefrom.
page 5
approve rulemaking, enhance information systems
and review developments in the municipal securi-
ties market. The operations of the MSRB are funded
through assessments on dealers and a professional
staff in Alexandria, Virginia manages the MSRB’s day-
to-day operations.
About EMMA
The Electronic Municipal Market Access system, or
EMMA, is the official online repository for electronic
municipal disclosure documents and market data.
EMMA, available at www.emma.msrb.org, provides
comprehensive and free access to key informa-
tion about municipal securities presented in a manner
specifically tailored for retail, non-professional investors
who may not be experts in financial or investing matters.
EMMA houses municipal disclosure documents in-
cluding offering documents, called official statements,
for most new offerings of municipal bonds, notes, 529
college savings plans and other municipal securities
issued since 1990. EMMA also provides access to
advance refunding documents, which detail arrange-
ments made when new bonds are issued to establish
escrows to pay off existing bonds (usually to refinance
their debt at a lower interest rate). Ongoing disclo-
sures about municipal bonds throughout the life of the
bonds also are available on EMMA. These continuing
disclosures, which include annual financial statements
and notices of material events, reflect the financial or
operating condition of the issuer and events that can
affect the ability of an issuer to repay its bonds and the
value of the bond, among other things.
EMMA provides market transparency data, which in-
cludes real-time prices and yields at which bonds
and notes are bought and sold, for most trades oc-
curring on or after January 31, 2005. Interest rates for
municipal securities, including those for auction rate
securities and variable rate demand obligations, are
available on EMMA as well. A market statistics section
on EMMA provides a summary of municipal securities
transaction activity since 2006 and EMMA’s Education
Center houses useful information for the public and
investors about municipal bonds.
EMMA is a service of the Municipal Securities Rule-
making Board.
Municipal Securities Rulemaking Board